Global aircraft financiers flag issues with India's repossession draft rule
MUMBAI: Global aircraft lessors and financiers have raised concerns over India's new draft rules on aircraft repossession, warning that the proposals, if finalised, could slow recovery of planes from defaulting airlines and raise financing risks.
The civil aviation ministry last week put out the draft Protection of Interests in Aircraft Objects Rules, 2025 for public consultation, giving stakeholders 30 days to respond.
The draft, which seeks to implement the Cape Town Convention (CTC), makes it mandatory for creditors-through the Irrevocable De-registration and Export Request Authorisation ( IDERA) holder-to clear a wide set of dues before exporting aircraft from the country. This includes unpaid employee wages and provident fund, airport operator fees, navigation charges, fuel bills, and GST on leases or financing.
Aircraft cannot be taken out of the country until these obligations are settled. The draft also removes an aviation regulator rule from 2018 that had capped airport and navigation charges at three months from the date of deregistration notice.
Industry executives say the move, meant to protect local stakeholders, marks a sharp shift from international practice. "Clearing every local charge before repossession adds layers of complexity and risk. Even a small dispute could hold up an aircraft for weeks," said a senior lessor executive, requesting anonymity.
Aviation lawyer Nitin Sarin, managing partner at Sarin & Co, said the draft imposes liabilities that do not always belong to lessors. "You cannot blanketly put everything on the aircraft lessor. Dues payable to employees, for instance, have no direct connection to an aircraft," he said.
He added that the broader Act as passed by Parliament was sound but that the rules "leave a lot that remain wanted. There's a lot more that could have been done."
The civil aviation ministry last week put out the draft Protection of Interests in Aircraft Objects Rules, 2025 for public consultation, giving stakeholders 30 days to respond.
The draft, which seeks to implement the Cape Town Convention (CTC), makes it mandatory for creditors-through the Irrevocable De-registration and Export Request Authorisation ( IDERA) holder-to clear a wide set of dues before exporting aircraft from the country. This includes unpaid employee wages and provident fund, airport operator fees, navigation charges, fuel bills, and GST on leases or financing.
Aircraft cannot be taken out of the country until these obligations are settled. The draft also removes an aviation regulator rule from 2018 that had capped airport and navigation charges at three months from the date of deregistration notice.
Industry executives say the move, meant to protect local stakeholders, marks a sharp shift from international practice. "Clearing every local charge before repossession adds layers of complexity and risk. Even a small dispute could hold up an aircraft for weeks," said a senior lessor executive, requesting anonymity.
Aviation lawyer Nitin Sarin, managing partner at Sarin & Co, said the draft imposes liabilities that do not always belong to lessors. "You cannot blanketly put everything on the aircraft lessor. Dues payable to employees, for instance, have no direct connection to an aircraft," he said.
He added that the broader Act as passed by Parliament was sound but that the rules "leave a lot that remain wanted. There's a lot more that could have been done."
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